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The health drink opportunity

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How retailers can make the best of the opportunities presented by the rising consumer preference for healthy beverages

The beverage category is highly elastic in nature. Modern Trade plays a big role for brands that need to partner with retailers through innovative ways of driving penetration like through loyalty programs and activations on digital platforms.

Retailers that Progressive Grocer spoke to say that they see a sharp spurt in consumers’ desires to get healthier. Indians reject drinks that either contain artificial ingredients or high sugar levels. Indian consumers are now more mindful of what they are consuming. This opens up an opportunity for manufacturers to launch products that are low in sugar or contain no additives.

There is even scope to offer products that are fortified with additional nutrients for specific health benefits, such as vitamin D, calcium, or protein. Delhi-NCR based supermarket chain Modern Bazaar, which operates 18 stores in the region, stocks all kinds of beverages: Indian, imported, health drinks, juices, and organic juices. “The contribution of beverage category to our overall sales is 6-7% with the major share coming from raw juices, cold coffee and from brands like Coca-Cola and Pepsi,” said Kunaal Kumar, managing director and chief executive officer of the chain.

‘’Raw juices are doing well and with their increased shelf life, cold-pressed juices and organic juices are clocking faster sales. Our fastest growing products used to be soft drinks like Coke and Pepsi, but people are now more health conscious and are opting for coconut water and coco-jal instead,” he added.

He says that brands and manufacturers should aim for introducing healthy, low-fat, and organic beverages as there exists a huge white space for such products. Among the recent beverage-forward innovations, he counts cold-pressed juices and cold coffee as exemplars that have helped brands to meet emerging consumer needs for health and wellness.

 “The beverage sector will keep growing because in India there is hot weather for nine months. People today don’t want too much sugar or fat in their drinks, so the beverage sector should focus on health-oriented products. Brand and products that have a longer shelf life, good taste, and come with lesser preservatives, will find many takers in this space,” he said.

‘’People have started to shift towards drinks with no sugar, and hence almost all brands in the beverage category have introduced no-sugar alternatives to their classic drinks,” said Aryan Aggarwal, director of Delhi-NCR-based Yess Superstores.

At Magson, which operates 26 stores across 12 cities in Gujarat, Maharashtra, and Rajasthan, beverages constitute an important part of its product mix, contributing about 5% of its overall sales. The retailer expects this number to go up in the coming years, fuelled by a steady rise in health awareness and the demand for natural, healthy, organic and premium food & beverages in tier 1 and 2 cities.

“Over the years, we have observed a consistently good demand for juices, cold-pressed juices, imported water, almond milk, tonic and ginger ale across our stores. Monin Syrups and RAW Pressery cold-pressed juices continue to be amongst the most popular beverage brands at Magson,” said Rajesh Francis, managing director, Magson Retail and Distribution Pvt. Ltd.

According to him joint efforts by brands and retailers to promote 100% natural, organic, healthy, and sugar-free beverages in tier 1 and 2 cities can result in good payoffs for both.

 “With better health awareness, customers are now more open to understanding and adopting health and lifestyle concepts such as ‘Drink Your Food’, with the focus on balanced diet and complete nutrition through consumption of health drinks,” said Francis.

According to Francis, although the beverage category is moving decisively towards health and wellness drinks, many MNCs and bigger brands have not been able to fully exploit this shift in consumer behavior. “This market gap offers a tremendous opportunity for brands to come up with their own range of healthier products. Manufacturers can introduce a wider range of health drinks and also focus on advocacy marketing campaigns and credible celebrity endorsements to educate consumers, stimulate demand, and incentivize adoption in tier 1 and 2 cities,” he added.

In a scenario where healthier food products have now become a rage, especially in the wake of the Covid crisis, natural health beverages, which include 100% fruit juices, natural mineral water, green tea and malt-based hot drinks have emerged as a high-growth segment within beverages.

This is an excerpt from ‘How brands can make consumers drink their kool aid’ published in the April Edition of Progressive Grocer By Progressive Grocer Bureau. To read the full story, subscribe to the magazine.

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